Tax Talk

Is amount withdrawn from EPF account taxable? I worked for a company for 4 years and 10 months and withdrew EPF amount without the pension amount. I had worked for another company before and applied for EPF transfer to my last company.

— Rajesh G

According to the tax rules, the accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be not be taxable in case any of the conditions listed below are met:

The individual has rendered a continuous service, for a period of five years or more, with his employer. In case the individual has resigned before the completion of 5 years, then on the cessation of his employment, the employee gets a job with any other employer, and to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognised provident fund maintained by such other employer and the total combined continuous period of employment with the employers is 5 years or more.

The service has been terminated by reason of the employee’s ill-health or by the contraction or discontinuance of the employer's business or other cause beyond the control of the employee in case the individual has not rendered such continuous service.

Therefore, the withdrawal from your EPF account referred above will be tax exempt in your hands assuming that the total continuous period of employment with both the employers taken together is more than 5 years and the contribution were made to a recognised provident fund.

My wife is a home-maker. She had won Rs 1.4 lakh in a game show after 30 per cent TDS deducted at source. Can she claim the TDS amount and if so, what is the procedure? She has a PAN card. Please advise.

— Anmol

According to the provisions of the Income-tax Act, 1961, any income derived by an individual by way of winnings from a game of any sorts shall be taxable at a flat rate of 30.9 per cent (including Education Cess and Secondary and Higher Education Cess). You have indicated that tax @ 30 per cent has already been deducted by the game show. She will have to pay the additional 0.9 per cent of the total tax as self assessment tax to cover the Education Cess and Secondary and Higher Education Cess. Please note that the minimum exemption limit of Rs 2 lakh is not applicable in case of winnings from lotteries, games. Your wife needs to file her Income-tax return but she cannot claim the TDS amount as refund as the said income is taxed at a special rate of 30.9 per cent.

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(The author is a practising chartered accountant)